Friday, May 7, 2010

Cadbury Vs Kraft - Kunal Bansode

Executive Summary:

In this report I have done Analysis of Cadbury and Kraft, SWOT Analysis of Cadbury and Kraft confectionery companies.

Cadbury and Kraft are the best known confectionery companies in the world. Confectionary industry is very large scale industry and Cadbury and Kraft these two are the major players of the industry. This project report shows the different work culture/environment, strategies, planning, and working of the two companies. This report contains the brief information about the two companies and some facts and figures. This report shows the various product range of Cadbury and Kraft confectionary. This report shows the importance of brand, how the brand name is works globally. Branding helps differentiate products and can be a powerful tool of competitive strategy.Building strong brand is an important marketing strategy for companies, enabling premium pricing and making widespread distribution easier to achieve.

Cadbury plc

Type Subsidiary of Kraft Foods

Founded 1824

Headquarters Uxbridge, London,United Kingdom

Key people Irene Rosenfeld Chairwoman & CEO

Industry Confectionery

Revenue GB£5,384 million (2008)

Operating income GB£388 million (2008)

Net income GB£364 million (2008)

Employees 71,657 (2008)

Parent Kraft Foods

Website www.cadbury.com

Introduction:

Cadbury is a British-based confectionery company, the industry's second-largest globally after the combined Mars-Wrigley. Headquartered in Uxbridge, England and formerly listed on the London Stock Exchange, Cadbury was acquired by Kraft Foods in March 2010. The company was an ever-present constituent of the FTSE 100 from the index's 1984 inception until its 2010 takeover. The firm was known as "Cadbury Schweppes plc" from 1969 until a May 2008 demerger, which saw the separation of its global confectionery business from its U.S. beverage unit, which has been renamed Dr Pepper Snapple Group Inc.

History:

Early history

In 1824, John Cadbury began vending tea, coffee, and drinking chocolate, which he produced himself, at Bull Street in Birmingham, England. John Cadbury later moved into the production of a variety of Cocoas and Drinking Chocolates being manufactured from a factory in Bridge Street, supplying mainly to the wealthy due to the high cost of manufacture at this time. During this time a partnership was struck between John Cadbury and his brother Benjamin. At this time the company was known as 'Cadbury Brothers of Birmingham'. The two brothers opened an office in London and in 1854 received the Royal Warrant as manufacturers of chocolate and cocoa to Queen Victoria. Around this time in the 1850s the industry received a much needed boost with the reduction in high import taxes on cocoa; this allowed chocolate to become more affordable to everyone. Due to the popularity of a new expanded product line, including the very popular Cadbury's Cocoa Essence, the company's success led to the decision in 1873 to cease the trading of tea. Around this time, master confectioner Frederic Kinchelman was appointed to share his recipe and production secrets with Cadbury, which led to an assortment of various chocolate covered items.

In 1878, John Cadbury's sons Richard and George (who had taken over the company after John Cadbury's retirement in 1861), acquired the Bournbrook estate, comprising fourteen and a half acres of countryside five miles south of the outskirts of Birmingham. They renamed the Bournbrook estate to Bournville and opened the Bournville factory in 1879. In1893, George Cadbury bought 120 acres (49 ha) of land close to the works and planned, at his own expense, a model village which would 'alleviate the evils of modern more cramped living conditions'. By 1900 the estate included 313 cottages and houses set on 330 acres (130 ha) of land. As the Cadbury family were Quakers there were no pubs in the estate; in fact, it was their Quaker beliefs that first led them to sell tea, coffee and cocoa as alternatives to alcohol.

1900 to 1950s

In 1915 Cadbury's Milk Tray was first produced and throughout the First World War. More than 2,000 of Cadbury's male employees joined the Armed Forces. To support the war effort, Cadbury provided clothing, books and chocolate to soldiers. After World War I, the Bournville factory was redeveloped and mass production began in earnest. In 1918, Cadbury opened their first overseas factory in Hobart, Tasmania and in 1919 undertook a merger with J. S. Fry & Sons, another chocolate manufacturer which saw the integration of well-known brands such as Fry's Chocolate Cream and Fry's Turkish Delight.

During World War II, parts of the Bournville factory were turned over to war work, producing milling machines and pilot seats. Workers ploughed football fields in which to plant crops. As chocolate was regarded as an essential food it was placed under government supervision for the entire war. The wartime rationing of chocolate ended in 1949, and normal production resumed. Cadbury subsequently built new factories and had an increasing demand for their products.

Merger with Schweppes:

The Cadbury Schweppes logo used until the demerger in 2008

Cadbury merged with drinks company Schweppes to form Cadbury Schweppes in 1969.

Cadbury Schweppes went on to acquire Sunkist, Canada Dry, Typhoo Tea and more. In the US, Schweppes Beverages was created and the manufacture of Cadbury confectionery brands were licensed to Hershey's. Snapple, Mistic and Stewart's (formerly Cable Car Beverage) were sold by Triarc to Cadbury Schweppes in 2000 for $1.45 billion. In October of that same year, Cadbury Schweppes purchased Royal Crown from Triarc.

Demerger

In March 2007, it was revealed that Cadbury Schweppes was planning to split its business into two separate entities: one focusing on its main chocolate and confectionery market; the other on its US drinks business. The demerger took effect on 2 May 2008, with the drinks business becoming Dr. Pepper Snapple Group Inc. Cadbury is selling its Australian beverage unit to Asahi Breweries.

Recent developments

In October 2007, Cadbury announced the closure of the Keynsham chocolate factory, formerly part of Fry's. Between 500 and 700 jobs were affected by this change. Production transferred to other plants in England and Poland. In 2008 Monkhill Confectionery, the Own Label trading division of Cadbury Trebor Bassett was sold to Tangerine Confectionery for £58million cash. This sale included factories at Pontefract, Cleckheaton and York and a distribution centre near Chesterfield, and the transfer of around 800 employees. In mid-2009 Cadbury replaced some of the cocoa butter in their non-UK chocolate products with palm oil. Despite stating this was a response to consumer demand to improve taste and texture, there was no "new improved recipe" claim placed on New Zealand labels. Consumer backlash was significant from environmentalists and chocolate lovers. By August 2009, the company announced that it was reverting to the use of cocoa butter in New Zealand. In addition, they would source cocoa beans through Fair Trade channels.

Kraft buyout

On 7 September 2009 Kraft Foods made a £10.2 billion (US$16.2 billion) indicative takeover bid for Cadbury. The offer was rejected, with Cadbury stating that it undervalued the company. Kraft launched a formal, hostile bid for Cadbury valuing the firm at £9.8 billion on 9 November 2009. Business Secretary Peter Mandelson warned Kraft not to try to "make a quick buck" from the acquisition of Cadbury. On 19 January 2010, it was announced that Cadbury and Kraft Foods had reached a deal and that Kraft would purchase Cadbury for £8.40 per share, valuing Cadbury at £11.5bn (US$18.9bn). Kraft, which issued a statement stating that the deal will create a "global confectionery leader", has had to borrow £7 billion (US$11.5bn) in order to finance the takeover. The Hershey Company, the Pennsylvania chocolate company, which reportedly shares Cadbury's "ethos", had expressed an interest in buying Cadbury because it would broaden its access to faster-growing international markets. But on 22 January 2010, Hershey announced that it will not counter Kraft's final offer. Hershey already manufactures and distributes Cadbury-branded chocolate (but not its other confectionery) in the United States. The acquisition of Cadbury faced widespread disapproval from the British public, as well as groups and organizations including trade union Unite, who fought against the acquisition of the company which, according to Prime Minister Gordon Brown, is very important to the British economy. Unite estimated that a takeover by Kraft could put 30,000 jobs "at risk", and UK shareholders protested the M&A advisory fees charged by banks. Cadbury's M&A advisers are UBS, Goldman Sachs and Morgan Stanley. RBS, a bank 84% owned by the United Kingdom Government, is controversially funding the Kraft takeover. On 2 February 2010, Kraft secured over 71% of Cadbury's shares thus finalising the deal. Kraft had needed to reach 75% of the shares in order to be able to delist Cadbury from the stock market and fully integrate it as part of Kraft. This was achieved on 5 February 2010, and the company announced that Cadbury shares would be de-listed on 8 March 2010. On 3 February 2010, the Chairman Roger Carr, chief executive Todd Stitzer and chief financial officer Andrew Bonfield all announced their resignations. Stitzer had worked at the company for 27 years. On 9 February 2010, Kraft announced that they plan to close the Cadbury factory at Keynsham near Bristol with the loss of 400 jobs. The management explained that existing plans could not realistically be reversed, though assurances had been given regarding sustaining the plant. Production is to move to Poland.

Operations

United Kingdom

Cadbury plc also owns Trebor Bassett, Fry's, Maynards and Halls. The confectionery business in the UK is called Cadbury UK (formerly Cadbury Trebor Bassett) and, as of August 2004, had eight factories and 3,000 staff in the UK. Biscuits bearing the Cadbury brand, such as Cadbury Fingers, are produced under license by Burton's Foods. Ice cream based on Cadbury products, like 99 Flake, is made under license by Frederick's Dairies. Cadbury cakes and chocolate spread are manufactured under license by Premier Foods, but the cakes were originally part of Cadbury Foods Ltd with factories at Blackpole in Worcester and Moreton on the Wirral with distribution depots throughout the UK.

Ireland

Cadbury Ireland Limited is a confectionery company in Ireland based in Coolock in Dublin.

United States

Cadbury plc's presence in the United States consists of the confectionery unit Cadbury Adams, manufacturers of gum and mints but not chocolate. Cadbury merged with Peter Paul in 1978. Ten years later Hershey's acquired the chocolate business from Cadbury's. Accordingly, although the Cadbury group's chocolate products have been sold in the US since 1988 under the Cadbury name, the chocolate itself has been manufactured by Hershey's and can be found in Hershey's chocolate stores. Prior to the May 2008 demerger, the North American business also contained beverage unit Cadbury Schweppes Americas Beverages. In 1982, Cadbury Schweppes purchased the Duffy-Mott Company.

Australasia

Cadbury also operate four Australasian confectionery factories; two in Melbourne, Victoria (Ringwood and Scoresby), one in Hobart, Tasmania (Claremont), and one in Dunedin, New Zealand. The Claremont factory was once a popular tourist attraction and operated daily tours; however the factory ceased running full tours mid-2008, citing health and safety reasons. Cadbury Schweppes has been upgrading its manufacturing facility at Claremont, Tasmania, Australia, since 2001

Executive compensation

In 2008 Todd Stitzer, Cadbury's CEO, was paid a £2,665,000 bonus. Combined with his annual salary of £985,000 and other payments of £448,000 this gives a total remuneration of over £4 million.

Accounting

In July 2007, Cadbury Schweppes announced that it would be outsourcing its transactional accounting and order capture functions to Shared Business Services (SBS) centers run by a company called Genpact, (a businesses services provider) in India, China, and Romania. This was to affect all business units and be associated with U.S. and UK functions being transferred to India by the end of 2007, with all units transferred by mid-2009. Depending on the success of this move, other accounting Human Resources functions may follow. This development is likely to lead to the loss of several hundred jobs worldwide, but also to several hundred jobs being created, at lower salaries commensurate with wages paid in developing countries.

Products

Cadbury plc manufactures chocolates and sweets such as the popular Cadbury Dairy Milk.

Notable product introductions include:

• 1865: Cocoa Essence

• 1875: Easter Eggs

• 1897: Milk Chocolate

• 1897: Cadbury Fingers

• 1905: Dairy Milk

• 1908: Bournville Chocolate

• 1915: Milk Tray

• 1920: Flake

• 1923: Creme Egg

• 1929: Crunchie

• 1938: Roses

• 1948: Fudge

• 1960: Dairy Milk Buttons

• 1968: Picnic

• 1970: Curly Wurly

• 1983: Wispa (relaunched 2007)

• 1985: Boost

• 1987: Twirl

• 1992: Time Out

• 1996: Fuse

• 2001: Brunch Bar, Dream and Snowflake

• 2010: Cadbury dairy milk silk, richer, finer milk chocolate

Health and safety

2006 Salmonella scare

On 19 January 2006, Cadbury Schweppes detected a rare strain of the Salmonella bacteria, affecting seven of its products, said to have been caused by a leaking pipe. The leak occurred at its Marlbrook plant, in Herefordshire, which produces chocolate crumb mixture; the mixture is then transported to factories at Bournville and Somerdale to be turned into milk chocolate.

Cadbury Schweppes did not officially notify the Food Standards Agency until 19 June 2006, shortly after which it recalled more than a million chocolate bars. In December 2006, the company announced that the cost of dealing with the contamination would reach £30 million. In April 2007, Birmingham City Council announced that it would be prosecuting Cadbury Schweppes in relation to three alleged offences of breaching health and safety legislation. An investigation being carried out at that time by Herefordshire Council led to a further six charges being brought. The company pleaded guilty to all nine charges, and was fined 1 million pounds at Birmingham Crown Court—the sentencing of both cases was brought together. Analysts have said the fine is not material to the group, with mitigating factors limiting the fine being that the company quickly admitted its guilt and said it had been mistaken that the infection did not pose a threat to health.

2007 recalls:

On 10 February 2007, Cadbury announced they would be recalling a range of products due to a labelling error. The products were produced in a factory handling nuts, potential allergens, but this was not made clear on the packaging. As a precaution, all items were recalled. On 14 September 2007, Cadbury Schweppes investigated a manufacturing error over allergy warning, recalling for the second time in two years thousands of chocolate bars. A Printing mistake at Somerdale factory resulted in the omission of tree nut allergy labels from 250 g Dairy Milk Double Chocolate bars.

2008:

On 29 September 2008 Cadbury withdrew all of its 11 chocolate products made in its three Beijing factories, on suspicion of contamination with melamine. The recall affected the mainland China markets, Taiwan, Hong Kong and Australia. Products recalled included Dark Chocolate, a number of products in the 'Dairy Milk' range and Chocolate Éclairs.

2009 Hydrogenation:

Cadbury continues to use hydrogenated oils in many of its signature products. Although trans fats are present, the nutrition labels round the values down to zero.

Strategy :

They believe that the business still has significant untapped potential- both in terms of top line growth and returns. By exploiting the strength of our leadership positions to continue to grow our market share and significantly increase thier margins and returns, they aim to achieve thier vision of becoming the biggest and best confectionary company in the world.

Our vision into Action (VIA) plan for 2008 to 2011 aligns the energies and efforts of their teams around the world behind a number of priorities which will make the most impact on their revenue and margin performance.

In order to generate superior returns for their shareowners, their VIA will deliver six financial targets. These are set out in their financial performance scorecard below:

To achieve these financial goals, we have a growth and efficiency strategy which aligns behind our focus on fewer, faster, bigger and better. This focus is being applied to all aspects of their business.

Culture:

They have a clear vision, performance scorecard, priorities and sustainably commitments. As a culture they value performance, quality, respect, integrity and responsibility. They work as one team across geographic and functional boundaries to be the best. They work hard and have fun along the way.

They listen to their consumers, customers, suppliers, shareowners, colleagues and communities. Their success is sustained by understanding and responding to their needs.

They have always believe that ‘doing good is good for business’. This belief inspired their founders and is still at the heart of the way we work today, they this as key to their future success.

SWOT Analysis:

As we know SWOT analysis strategic planning tool use to evaluate the strengths, weaknesses, opportunities and threats involved in a project or in any other situation requiring a decision. Strengths and weaknesses are internal factors and threats and opportunities are external factors.

Strength :

ØCadbury scheweppes plc is a very profitable organization, generated revenue of more than 6,508 billion euro

ØIt is a global chocolate brand built upon a reputation for the products and serevices.

ØCadbury Schweppes plc was one of the fortune top 100 companies to work for in 2007. The company is a respected employer that values its workforce.

ØCadbury has the reputation for new product development and creativity. However they remain vulnerable to the possibility that their innovation may falter over time.

ØThe organization has a strong presence in United States of America, UK and India. It is often argued that they need to look for portfolio of countries, in order to spread business risk.

ØCadbury’s recall over 1 million chocolate bars over salmonella fears.

ØThe organization is dependent on main competitive advantage, the retail of coffee.this could make them slow to diversity into other sectorsshould the need arise.

ØThe company has no apprehensions of cannibalization of its chocolate brands.

Opportunities:

ØThe Cadbury company has the opportunity to its expands its global operations. New market with new product of which are limited in particular region.

ØCadbury has decided to focus on a few products such as Cadbury Dairy Milk, Bournvita, Eclairs and Halls to drive growth for the company.

ØCo-branding with other manufacturers of food and drink and franchising to manufacturers of other goods and services both have potential.

ØCadbury India is attempting to increase the inclining market for chocolate with innovation, one of which is its sweet snacks, Bytes.

ØSome cricketers as a Brand ambassador for advertising there new products.

Threats:

ØWho knows if the market for Cadbury will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future?

ØHealth organization have so many barriers for new development

ØCadbury’s are exposed to rises in the cost of chocolate and dairy products.

ØEntry into salted snacks was ruled out so it is important to do new innovation and marketing research.

Kraft Foods

Type Public (NYSE: KFT)

Founded Chicago, Illinois (1903)

Headquarters Northfield, Illinois

Key people Irene Rosenfeld, Chief Executive Officer

Industry Food Processing Finance

Revenue ▲ US$42.2 billion (2008)

Operating income▼ US$3.8 billion (2008)

Net income▲ US$2.9 billion (2008)

Employees 98,000 (2008)

Website www.kraftfoodscompany.com

Introduction :

Kraft Foods, Inc. (NYSE: KFT) is the largest confectionery, food, and beverage corporation headquartered in the United States and the second-largest in the world (after Nestlé SA).It markets many brands in more than 155 countries. The company is headquartered in Northfield, Illinois, a Chicago suburb. Its European headquarters are just outside [Zürich], Switzerland. A public company, it is listed on the New York Stock Exchange and became a component of the Dow Jones Industrial Average on September 22, 2008, replacing the American International Group.

Origin of the firm:

The firm today known as Kraft Foods was formed on 10 December 1923 by Thomas H. McInnerney with financing provided by Goldman Sachs, Lehman Brothers and Tobey & Kirk. The firm was initially set up to execute on a rollup strategy in the then fragmented United States ice cream industry. Through acquisitions it expanded into a full range of dairy products. By 1930, eight years after it was founded, it was the largest dairy company in the United States and the world, exceeding Borden.

McInnerney operated the Hydrox Corporation, an ice cream company located in Chicago, Illinois. In 1923 he went to Wall Street to convince investment bankers there to finance his scheme for consolidating the United States ice cream industry. He initially found "hard sledding" with one banker saying the dairy industry "lacked dignity." He persevered and convinced a consortium including Goldman Sachs and Lehman Brothers to finance a roll-up strategy. As a result of his efforts, National Dairy Products Corporation was formed in 1923 in a merger of McInnerney's Hydrox with Rieck McJunkin Dairy Co of Pittsburg, Pennsylvania The resulting firm was then listed on the New York Stock Exchange with the offer of 125,000 shares having been oversubscribed. The firm grew quickly through a large number of acquisitions. As is typical in a roll-up strategy, acquisitions were primarily for stock in National rather than cash. Examples of firms acquired include: (list is not complete - National acquired more than 55 firms between 1923 and 1931)

Canadian-born and of German origin, James L. Kraft started a wholesale door-to-door cheese business in Chicago in 1903; its first year of operations was "dismal", losing US$3,000 and a horse. However, the business took hold and Kraft was joined by his four brothers to form J.L. Kraft and Bros. Company in 1909. As early as 1911, circulars and advertisements were in use by the company. In 1912, the company established its New York City, New York, headquarters to prepare for its international expansion. By 1914, thirty-one varieties of cheeses were being sold around the U.S. because of heavy product development, expansion by marketing, and opening a wholly owned cheese factory in Illinois. In 1915, the company had invented pasteurized processed cheese that did not need refrigeration, thus giving a longer shelf life than conventional cheese. The process was patented in 1916 and about six million pounds of the product were sold to the U.S. Army for military rations during World War I. In 1916, the company began national advertising and had made its first acquisition — a Canadian cheese company. In 1924, the company changed its name to Kraft Cheese Company and listed on the Chicago Stock Exchange.[8]. In 1926 it was listed on the NYSE. The firm then began to consolidate the United States dairy industry through acquisition, in competition with National and Borden. Firms acquired included:

Year

Firm

Sector

Location

1927

A.E. Wright

Salad dressings

n/a

1928

Phenix Cheese

Cheese, other dairy products

National

1928

Southern Dairies

Fluid milk, milk powder, other dairy products

U.S. South

1928

10 "cheese dealers"

Cheese, other dairy products

New York

1928

Henard Mayonnaise Co

Mayonnaise

n/a

1929

D.J. Easton

Mayonnaise

New Jersey

1929

2 other mayonnaise companies

Mayonnaise

n/a

1929

10 companies

Cheese, other dairy products

various regional

1929

International Wood Products

n/a

n/a

1929

Gelfand Manufacturing

n/a

n/a

Later, in 1927, it established its London, United Kingdom, and Hamburg, Germany, sales offices — its first forays outside North America. Sales for 1927 were $60.4m.

In 1928, it acquired Phenix Cheese Company, the maker of a cream cheese branded as Philadelphia cream cheese, and the company changed its name to Kraft-Phenix Cheese Company.

In 1929, the New York Times reported that Kraft Phenix, Hershey and Colgate were looking at merging. In the same year it was reported that National, Borden and Standard Brands (a firm that is now part of Kraft Foods) were all looking at acquiring the firm.

By 1930, it had captured forty percent of the cheese market in the U.S. and was the third largest dairy company in the United States after National Dairy and Borden. In 1930, the company also began operating in Australia following a merger with Fred Walker & Co.

Post National acquisition of Kraft-Phenix:

At the time of the acquisition, National Dairy had sales of $315m compared with $85m for Kraft Phenix. National Dairy management ran the combined business. Following the Kraft-Phenix acquisition, the firm continued to be called National Dairy until 1969 when it changed its name to Kraftco.

Historically, all of the firm's sales came from dairy products. However, the firm's product lines began to diversify away from dairy products to caramel candies, macaroni and cheese dinners and margarines. From the 1950's onward, the firm began to move away from low value added commodity dairy products, such as fluid milk.This trend would continue for the firm, through neglect and divestiture, until the primary remaining dairy product produced by the firm would be cheese. As a result, the modern history of the firm emphasizes the cheese history.

In 1933, the company began marketing by radio sponsorship. In 1935, the Sealtest brand of ice cream was launched as a unified national brand to replace the firms numerous regional brands.

During World War II, the company sent four million pounds of cheese to Britain weekly.Product development and advertising helped the company to grow during the postwar years, launching sliced process cheese and Cheez Whiz, a brand of process cheese sauce, in the 1950s. During these years, Thomas McInnerney, National Dairy's founder, and James L. Kraft, Kraft's founder, died, and at the end of the decade, the divisions became less autonomous and even diversified to the glass-packaging business with the acquisition of Metro Glass in 1956.In 1947 the company tested the marketing power of the emerging medium of television by producing an hour-long drama/anthology series, the Kraft Television Theatre. The product advertised on the program, McLaren’s Imperial Cheese, was selected because "... [it had] not only had no advertising appropriation whatsoever, but had not even been distributed for several years." As described by internal documents of J. Walter Thompson — the advertising firm which conceived of the marketing test — the result was "although there was no other advertising support for it whatsoever, still grocery stores could not keep up with the demand."

In the 1960s, product development became intense, launching fruit jellies, fruit preserves, marshmallows, barbecue sauces and Kraft Singles, a brand of individually wrapped cheese slices. During this decade, the company also expanded in many markets worldwide. In 1961 the firm acquired Dominion Dairies of Canada, marking the first effort by the firm to expand into fluid milk and ice cream outside the United States.In the same year it also acquired The Southern Oil Company in Manchester, England.

National Dairy becomes Kraft:

In 1969, the firm changed its name from National Dairy to Kraftco Corporation. The reason for the name change was given at the time: "Expansion and innovation have taken us far afield from the regional milk and ice cream business we started with in 1923. Dollar sales of these original products have remained relatively static over the past ten years and, in 1969 accounted for approximately 25% of our sales."At the same time the firm transferred to Glenview, Illinois, in 1972. In 1976, its name changed to Kraft, Inc. to emphasize the trademark the company had been known for and as a result of the fact that dairy, other than cheese, was now only a minor part of the company's sales. Reorganization also occurred after the name change.

Dart merger:

In 1980, Kraft merged with Dart Industries - makers of the Duracell brand of batteries, Tupperware brand of plastic containers, West Bend brand of home appliances, Wilsonart brand of plastics and Thatcher glass - to form Dart & Kraft.

During the 1980s, Dart & Kraft offered mixed results to its shareholders, as new acquisitions in the food business - such as Churny premium cheeses, Lender's Bagels, Frusen Gladje ice cream and Celestial Seasonings tea - slightly offset the lagging nonfood business - Tupperware's decrease in sales and KitchenAid's (acquired soon after the merger) slide in market share - leading Dart & Kraft to spin off its nonfood business (except Duracell batteries) into a new entity (Premark International, Inc.) while changing its name back to Kraft, Inc. Premark was bought by Illinois Tool Works in 1999. In 1988, Kraft sold Duracell to private equity firm Kohlberg Kravis Roberts, who then put it into an initial public offering in 1989. Gillette bought Duracell in 1996, and itself was acquired by Procter and Gamble in 2005.

Philip Morris acquisition and merger with General Foods:

At the end of 1988, Philip Morris Companies purchased Kraft for $12.9 billion. In 1989, Kraft merged with Philip Morris's General Foods unit - makers of Oscar Mayer meats, Maxwell House coffee, Jell-O gelatin, Budget Gourmet frozen dinners, Entenmann's baked goods, Kool-Aid, Crystal Light and Tang powdered beverage mixes, Post Cereals, Shake 'n Bake flavored coatings and numerous other packaged foods - as Kraft General Foods. Its aggressive product development was reversed after the merger, as it became slow in addressing issues on its product lines due to its size, and also company politics.

In 1990, the company acquired Jacobs Suchard (a European coffee and confectionery giant) and Freia Marabou (a Scandinavian confectionery maker) to expand overseas as its business was heavily dependent on the U.S. In 1993, it acquired RJR Nabisco's cold cereal business (mainly Shredded Wheat and Shreddies cereals) while selling its Breyers ice-cream division to Unilever and its Birds Eye unit to Dean Foods. In 1994, it sold its frozen dinners unit to H.J. Heinz and in 1995, it sold its foodservice unit.

In 1995, it changed its name to the present name, Kraft Foods. The same year, it sold its bakery division (except Lender's Bagels, which was sold in 1996 to CPC International), its candy division and its tablespreads division. Log Cabin syrup was sold in 1997.

Financial Expansion:

In 2000, Philip Morris (renamed Altria in 2003) acquired Nabisco Holdings for $18.9 billion and merged the company with Kraft Foods the same year.[8] In 2001, Philip Morris sold 280 million Kraft shares via the third-largest IPO of all time, retaining an 88.1% stake in the company.

In 2004, it sold its sugar confectionery division to Wrigley, while doing minor divestitures - including its hot cereals division in 2007, its pet snacks division in 2006, juice drinks and functional water in 2007 and some grocery brands in 2006.

Altria announced on January 31, 2007, that it would spin off all the remaining Kraft Foods shares to Altria's shareholders; each will be given approximately 0.7 share of Kraft for every Altria share they own. Investor Nelson Peltz bought a three-percent stake at Kraft Foods and is talking with the executives on revitalizing the business,[15] with options such as buying Wendy's fast food chain or selling off Post cereals and Maxwell House coffee. On January 31, 2007, after months of speculation, the company announced that its 88.1% stake would be spun off to Altria shareholders at the end of March 2007. Kraft is now an independent publicly held company.

In July 2007, the company bought Groupe Danone's biscuit (cookie) and cereal division for $7.2 billion, including iconic French biscuit brand Lefèvre-Utile.[15][16] While two years earlier firestorms of protest had arisen over plans for American PepsiCo's hostile takeover of the French company, Kraft's announcement was not met with the same protests, in part because Kraft agreed not to close French factories and keep the new merged divisions headquarters near Paris for at least three years.

In November 2007, Kraft agreed to sell its cereal unit to Ralcorp Holdings, a major private-label food maker, for $2.6 billion in a form of a spin-off merger. This would add 50% to Ralcorp's sales, to $3.3 billion, and will be used for Kraft's debt payment, which is at $13.4 billion, in danger of a downgrade by Standard and Poor's.

In February 2008, Berkshire Hathaway Inc. run by billionaire investor Warren E. Buffett announced that it had acquired an 8% stake in Kraft worth over $4 billion. Buffett's business partner Charles Munger had also invested over $300 million in Kraft.

On September 22, 2008, the company replaced the troubled insurance company, American International Group in the Dow Jones Industrial Average

Purchase of Cadbury:

On September 7, 2009, Kraft made a £10.2 billion takeover offer for the long-established British confectionery group Cadbury, makers of Dairy Milk and Bournville chocolate. On November 9, 2009 Kraft's £9.8bn takeover bid was rejected by Cadbury. Cadbury stated that the takeover bid was a "derisory" offer. Kraft renewed the offer under the same terms on December 4, 2009. The offer generated significant political and public opposition in the United Kingdom and abroad, even leading to calls for the government to invoke a policy of economic protectionism in cases of takeovers of large companies.

On January 6, 2010, Kraft agreed to sell its North American frozen pizza business to Nestle for $3.7 billion. The sale, which is subject to regulatory clearance, includes DiGiorno, Tombstone and Jack's brands in the United States, the Delissio brand in Canada and the California Pizza Kitchen trademark license. It also includes two Wisconsin manufacturing facilities in Medford and Little Chute. The business generated 2009 net revenues of $1.6 billion, with 3,400 employees.

On January 19, 2010, Cadbury finally approved a revised offer from Kraft, valuing the confectionery business at £11.5 billion ($19.5 billion US). The funding for the takeover is partially provided by the Royal Bank of Scotland, the British state-owned bank.

Sponsorships

Kraft is an official partner and sponsor of Major League Soccer and sponsors the Kraft Nabisco Championship, one of the four "majors" on the LPGA tour.

Promotions

Kraft HockeyVille is a Canadian reality television series developed by CBC Sports and sponsored by Kraft Foods in which communities across Canada compete to demonstrate their commitment to the sport of ice hockey.The contest revolves around a central theme of community spirit and Canada and is directed by Mike Dodson.

Brands:

The company's core businesses are in beverage, cheese and dairy foods, snack foods, confectionery, and convenience foods. The full list of Kraft brands can be found at Largest Brands on Kraft's own website. Kraft lists its own major brands, which each generate revenues exceeding $1 billion, as:

•Kraft

•Oscar Mayer

•Philadelphia

•Maxwell House

•Nabisco

•Oreo

•Jacobs

•Côte d'Or

•Milka

•LU

•Vegemite

50 additional brands have revenues greater than $100 million. In total, 40 brands are at least 100 years old.

In 1992, the gelatin industry, in particular Kraft's Atlantic Gelatin plant in Woburn, Massachusetts, which supplies the vast majority of Jell-O, came under scrutiny for a history of noxious smells, toxic waste releases into Boston Harbor, and a policy of corporate secrecy. Heading off a rash of local complaints, industry lobbyists invited Massachusetts state representatives Paul Casey and Carol Donovan into the plant. However, the representatives were barred from going past the conference room. Repeated requests for a plant tour by journalists were refused. In 1993, the plant was hit with a $250,000 fine for violating the Clean Air Act of 1970. In a February 4, 1996 article, the Associated Press reported that a Massachusetts Department of Environmental Protection official was one of only a few outsiders who had seen the inside of the Woburn plant.

Kraft began a major restructuring process in January 2004, following a year of declining sales, (blamed largely on the rising health consciousness of Americans), and the sacking of co-CEO Betsy Holden. The company announced closures of 19 production facilities worldwide and the reduction of 5,500 jobs, as well as the sale of 10% of its branded products. Kraft Foods expects to eliminate 8,000 jobs, roughly 8% of its workforce.

In 2005, the MX newspaper in Melbourne, Australia reported that Kraft refused to disclose the trans fat content of its products in its labelling. Company spokespeople contested the evidence that trans fats posed a known health risk and stated that a causal link was unproven. On September 7, 2009, Kraft made an offer to buy 100% of the share capital of Cadbury for over £10bn. The Panel on Takeovers and Mergers, the UK body that administers the City Code on Takeovers and Mergers, has given Kraft 40 days to secure the deal or walk away for at least six months. As a result the communications war between the two organizations has escalated. Kraft CEO Irene Rosenfeld launched the bid with an online video to sell its story to the investment community.

SWOT ANALYSIS:

Strengths:

vHighly trained managers and executives

vWell known brand name

vLarge customer base

vMarketed over 155 countries

vFinancial power

vStrong foundation

Weaknesses :

vProduct price is too high

vPreservative in products

vCultural difference

Threats:

vIncreasing competition

vImpose taxes

vLawsuits

vHealth consciousness

Opportunities :

vgrowing market

vtaking over smaller business

vlaunching new products

vexpansion in Indian market

Report Overview:

Cadbury India is a food product company with interests in Chocolate Confectionery, Milk Food Drinks, Snacks, and Candy. Cadbury is the market leader in Chocolate Confectionery business with a market share of over 70%. Some of the key brands of Cadbury are Cadbury Dairy Milk, 5 Star, Perk, Eclairs, Celebrations, Temptations, and Gems. In Milk Food drinks segment, Cadbury's main product - Bournvita is the leading Malted Food Drink in the country. Its heritage can be traced back in 1824 when John Cadbury opened a shop in Birmingham selling cocoa and chocolate. Since then they have expanded their business throughout the world by a program -me of organic and acquisition led growth. On 7 May 2008, the separation of their confectionery and Americas Beverages businesses was completed creating Cadbury plc with a vision to be the world's BIGGEST and BEST confectionery company. They make and sell three kinds of confectionery: chocolate, gum and candy We operate in over 60 countries John Cadbury opened for business in 1824 - making them nearly 200 years young they work with around 35,000 direct and indirect suppliers they employ around 45,000 people. Every day millions of people around the world enjoy our brand.

In developing market Kraft proposes to capitalize on population growth trends and exploit the scales to invest in infrastructure.It also sees a long-term opportunity of consumers trading up to its products. Kraft has a global portfolio of food brands—spanning categories such as snacks, beverages, cheese, grocery and convenient meals—that it can add on top of Cadbury’s existing portfolio. The acquisition of Cadbury Plc by Kraft Foods Inc. is an important event in India’s packaged food market. A decade ago, India would have been just a footnote in a mega acquisition such as this; the market barely excited global food firms.But that was then. India figured prominently in Kraft’s rationale for acquiring Cadbury and even in the latter’s defence argument asking for a higher price. The confectionery market can be broadly divided into chocolate, gum and sugar confections. Cadbury had a share of about 32% of the Indian confectionery market in 2008 and a 70% share of the chocolate market. Kraft has an insignificant presence in India compared with Cadbury’s sales of £240 million (around Rs1,800 crore). The Cadbury acquisition gives it a ready revenue base and a large distribution network reaching out to about one million outlets. The network of traditional grocery stores and modern trade is an especially valuable one, though the small retailers such as corner shops may not be of much use to Kraft. The environment is right, too, because Indian consumers are willing to buy premium products and firms have in modern trade an effective platform to address this market. Many of Kraft’s products would qualify as premium products in the Indian context. Kraft is bound to be a little more aggressive than Cadbury due to cultural differences and also the need to prove to its shareholders that the acquisition is indeed working. More clarity will emerge later, when the changes become visible on the ground. But large food companies such as Britannia Industries Ltd, Nestle India Ltd and even Hindustan Unilever Ltd could see some competitive pressures emerging in some product segments. While the tangible benefits of the acquisition are one aspect, Kraft’s ability to absorb Cadbury’s insights on the Indian market is more crucial. Cadbury’s transformation from a decade ago has been remarkable. It has become more aggressive, launching new products and variants, operating at several price points and thereby raising consumption, expanding distribution, tweaking its chocolates to withstand a hot climate and making a big play at capturing the festival gifting market. Kraft’s ability to customize its products and marketing strategy to suit the Indian marketplace is crucial; otherwise the potential will remain only on paper.

Kraft had till date operated in India through an import model and had been selling only one brand -- Tang powder drink here through distributors. A couple of years back, it sold off its powdered soft drink concentrate plant in Hyderabad since low volume offtake meant the plant was not commercially viable in the long term. It was represented by its 100% subsidiary KJS India.

The Indian packaged processed foods industry is estimated at Rs 50,000-60,000 crore, including biscuits, chocolates, ice-cream, confectionery, snacks, cheese and butter. Growing at a healthy 14-15% over the past two-three years, major players in the sector include Britannia, Nestle, Amul, ITC Foods, Parle, Kellogg’s, GlaxoSmithKline, Wrigley and Frito-Lay, among others.

Research:

While doing this project I got some impressive and interesting facts and strategies of Cadbury, and on the basis of these facts it is clear that Cadbury is better than the Kraft. These strategies and facts are as follows:

CADBURY: THE BRAND

The brand CADBURY enjoys a high level of brand equity. Researches show 90% of the people recognizes the brand while 74% state that when it comes to chocolate only CADBURY will do. Cadbury is a family brand\ Individual brand names (or multibrands): In this case each Individual brand names (or multibrands): In this case each Individual brand names (multi brands): in this case each brand is created and named separately and has separate identity. Using a family brand may not be that suitable as brand values may be far apart. Combination brand names: This approach allows for the optional use of the corporate brand name, while allowing an individual brand to be identified, e.g. Cadbury Dairy Milk.

Cadbury uses a combination of brand strategies. The family brand ,Cadbury is linked with its famous sub brands , i.e. Cadbury Crème Egg, Cadbury Roses and Cadbury Flake to name a few. The family brand identity is style communicated by packaging with the Cadbury corporate purple color and the distinctive Cadbury script logo. The sub brand is then distinguished by its own individual livery. Recently marketers have identified particularly strong family or corporate brands as MASTERBRANDS. Cadbury is such a brand. However, a true Masterbrand is more than name of the company – it incorporates the company’s mission, vision and values, representing them in a way that is easily understood by consumers. IBM is another example of MASTERBRAND. In the last year there has been a major development in brand strategy at Cadbury Ireland. The Cadbury Dairy Milk brand has been stretched to become a family brand in its own right. Of all the successful Cadbury brands, the one with the greatest loyalty is Cadbury Dairy Milk. In 2002 more than 19 million Dairy Milk products were sold. Cadbury y made a strategic marketing decision to leverage the value of the Dairy Milk brand (i.e. optimize the market potential of the brand ) by elevating it to a Megabrand or range brand.

SCOPE OF THE MEGABRAND

When developing a Megabrand, products are chosen for inclusion on the basis of their compatibility with the brand’s identity. For Cadbury, the (blocks) chocolate brands were included as they were perceived as variants of Dairy Milk. The core proposition of the new Dairy Milk Megabrand could be described as ‘delivering recipes for lives upbeat occasions i.e. no matter what your humor or the occasion, Cadbury Dairy Milk will provide the perfect accompaniment’ Two products in the Cadbury range created a dilemma: Wispa and Caramel. Both were standalone products with distinctive identities. Both had a loyal consumer base high should not be abandoned. To incorporate these products into the Dairy Milk range called for a fresh strategy. Both were blocking chocolate and provided a fit with the Dairy Milk Megabrand. Their inclusion provided the opportunity to further leverage. The Dairy Milk Megabrand without alienating loyal consumer s. The new Dairy Milk Bubbly brand benefited from a new name which better conveys the distinctive "mouth feel" of Wispa. The new aerated chocolate product now in square form, which is also easier to break, proved popular. Test showed that 85% of Wispa consumers were likely to buy Dairy Milk showed that 85% of Wispa consumers were likely to buy Dairy Milk, while 89% of Caramel customers indicated their likelihood to buy the new Dairy Milk Caramel. Other range refreshment initiatives involved deleting some products such as Banoffi while incorporating new variants like Cadbury Dairy Milk Orange Shots. This approach will keep the range fresh!!!!!!!

CADBURY AND ITS PRODUCTS:

Cadbury Boost is a chocolate bar made by Cadbury Ireland in the Republic of Ireland, and sold in the UK by Cadbury UK and also sold in Australia and South Africa. Its wrapper says that it consists of milk chocolate with caramel and biscuit filling. The wrapper also states that Boost is "Charged with glucose."

Cadbury Brunch Bar is a bar of cereals (oats, bran flakes and crispies) bound with honey and half covered in milk chocolate. They come in a variety of flavours: Raisin, Hazelnut, Apricot & Almond, Cranberry & Orange, Fruit & Nut, Mixed Berry, Chocolate Chip and Toasted Coconut and is made by Cadbury UK. They are breakfast type bars that are quick to eat in, and ideally as a slightly healthier and more wholesome snack option to chocolate bars. Cadbury Caramilk is a caramel-filled chocolate bar made by Cadbury Adams in Canada. It was first sold in 1968.[1] Variations available, some of them limited editions, include Caramilk made with dark chocolate maple, chocolate, or cappuccino. "Chunky" (thicker) versions called Caramilk "Thick" and cylindrical versions called "Caramilk Rolls" (similar to Rolo) have also been introduced.

Crispy Crunch is a hard chocolate bar with a crispy peanut flake inside that is made by Cadbury. Crispy Crunch is sold in Canada. Crispy Crunches were sold in the United States for a brief time in the 1990s by the food distribution arm of Pro Set, the collectible card company. Pro Set went bankrupt, resulting in Crispy Crunch no longer being available in the United States. A lower-calorie version of Crispy Crunch was available for a limited time in the mid-1990s. The original manufacturers, Neilson, sold all their chocolate brands to Cadbury in 1996, though packaging continued to feature the Neilson logo for a few years. Since Cadbury began manufacturing of the chocolate bar, the recipe has changed in that it is less salty and more sweet as it has a more of the crunchytopaz coloured candy coating around the centre.

Bar and a Half In June 2009 Cadbury launched the "Cadbury Dairy Milk Bar and a Half" range as a replacement to the Cadbury Dairy Milk "8 chunk" across several Dairy Milk variants. The concept is that the bar is to be more "portionable", so parts of the bar can be "saved for later" although the bar is the same as the old 8 chunk but in Fruit and Nut, Whole Nut and Standard. This bar has the new logo and packaging. A similar technique has been introduced with Cadbury Double Decker and Cadbury Boost bars. However instead of larger bars, two separate bars are packaged together and are called "Duo". Both brands received a packaging refresh at the same time.

Cadbury Dairy Milk Caramel is a chocolate bar that is part of the Cadbury Dairy Milk brand and is made by Cadbury UK and Cadbury Ireland. The bar is sold in the United Kingdom and Ireland. The bar was first launched in 1976, originally called Cadbury Caramel until 2003, when it was renamed. In early 2009 it was relaunched, with the Caramel name re-emphasised as the main on-pack brand, and the Dairy Milk brand reduced in size. he product is a Cadbury Dairy Milk chocolate bar semi-divided into blocks each of which has a caramel filling. The blocks vary in shape and number according to the size of the bar, but on all bars, the blocks are stamped with the word Cadbury on the top.

Cadbury celebrations : Cadbury Celebrations was aimed at replacing traditional gifting options like Mithai and dryfruits during festive seasons. Cadbury Celebrations is available in several assortments: An assortment of chocolates like 5 Star, Perk, Gems, Dairy Milk and Nutties and rich dry fruits enrobed in Cadbury dairy milk chocolate in 5 variants, Almond magic, raisin magic, cashew magic, nut butterscotch and caramels. The super premium Celebrations Rich Dry Fruit Collection which is a festive offering is an exotic range of chocolate covered dry fruits and nuts in various flavours and the premium dark chocolate range which is exotic dark chocolate in luscious flavours.

Cadbury Celebrations has become a popular brand on occasions such as Diwali, Rakhi, Dussera puja. It is also a major success as a corporate gifting brand. The communication is based on the emotional route and the tag line says "rishte pakne do" which fits with the brand purpose of strengthening your relationships with something sweet. Cadbury five star Cadbury 5 Star needed to introduce an element of surprise in its eat experience to gain share among lapsed consumers. To do this the variant Cadbury 5 Star Crunchy was launchedwhich still had the richness of caramel, chewiness of nougat but also contained rice crispies. In o rder to engage youth the campaign was executed acrossTV, radio, internet, outdoor and print media.

Cadbury Perk: A pretty teenager; a long line, and hunger! Rings a bell? That was how Cadbury launched its new offering; Cadbury Perk in 1996. With its light chocolate and wafer construct, Cadbury Perk targeted the casual snacking space that was dominated primarily by chips & wafers. With a catchy jingle and tongue in cheek advertising, this 'anytime, anywhere' snack zoomed right into the hearts of teenagers.

Raageshwari started the trend of advertising that featured mischievous, bubbly teenagers getting out of their 'stuck and hungry' situations by having a Cadbury Perk. Cadbury Perk became the new mini snack in town and its proposition "Thodi si pet pooja" went on to define its role in the category. As the years progressed, so did the messaging, which changed with changes in the consumers' way of life. To compliment Cadbury Perk's values, the bubbly and vivacious Preity Zinta became the new face of Perk with the 'hunger strike' commercial in the mid 90's.

Cadbury Gems : The saying "Good things come in small packets" has been proven right many a times and it couldn't have been truer for the pretty chocolate buttons called Gems. Who can forget the unique, brightly colored chocolate buttons with crispy shells, encased in a pack that's as colorful as the product itself? Unrivalled in all these years, Cadbury Gems has captured every consumer's fantasy for almost 4 decades. Little wonder that Cadbury Gems, the brand that came into India in 1968 is still going strong. Cadbury Gems brings happiness to the consumer's world. With this promise in mind, Cadbury Gems has always had 'Masti' as the key proposition in all its communication. In fact, Cadbury Gems is always a willing ally for pranks and fun.

Cadbury Bournvita : Cadbury was incorporated in India on July 19th, 1948 as a private limited company under the name of Cadbury-Fry (India). Cadbury Bournvita was launched during the same year. It is among the oldest brands in the Malt Based Food / Malt Food category with a rich heritage and has always been known to provide the best nutrition to aid growth and all round development. Throughout it's history, Cadbury Bournvita has continuously re-invented itself in terms of product, packaging, promotion & distribution. The Cadbury lineage and rich brand heritage has helped the brand maintain its leadership position and image over the last 50 years.

STRATEGY:

To promote the new Dairy Milk Brand core: This is the creed or genetic code of the brand; campaign. This involved a highly Megabrand, Cadbury implemented a To promote the new Dairy Milk Brand core: This is the creed or genetic code of the brand; Megabrand, Cadbury implemented a To promote the new dairy milk megabrand , Cadbury implemented comprehensive “360 degree support” campaign. This involved a highly coordinated set of promotional activities across various communications channel each activity bearing the same message . This approach is known as integrated marketing communications and ensures that consumers receive a clear and consistent message about a brand.

The 360 degree support campaign include a point of sale competition to win a new look , new display units , a buy-two-get-one free promotion on 100g bars, PR and advertisements in the trade press. The result was that sales of the new Megabrand products exceeded targets by 12 % !!

Survey report on LinkedIn websites:

(Q: Is Cadbury better than craft?)

ØCadbury is associated with quality (the best mass-market chocolates made in the English speaking world), Kraft with cheap junk (especially synthetic cheese). So yes, Cadbury's is better than craft (at least in reputation). It's like comparing a Rolls Royce with a Pinto.

ØThat's like saying is gold better than mud! Of course it is. Cadbury is a quality led brand with a massive history and global loyalty and goodwill. Kraft is a mere consolidator of foodstuff companies.

ØThis has nothing to do with the purpose of this group. May I suggest that you find a more appropriate place for your question? Not that I think LInkedIn is the place to get homework done, but who knows nowadays.

CONCLUSION:

From the above information it is clear that brand and quality are very important in any business. Branding helps differentiate products and can be a powerful tool of competitive strategy. While products can come and go over time, brands (if properly managed) can live indefinitely.

In today’s competitive business environment brands have assumed a role of growing importance. They can differentiate a company’s products and customer loyalty, helping to sustain profitability in the long term. The Cadbury Dairy Milk brand has evolved into a Megabrand incorporating a range of products each with their own identity, but now under the Dairy Milk brand. This initiative is intended to leverage the strength of the Cadbury Dairy Milk brand to the full. Branding is one of the most important aspects of any business, large or small, retail or B2B. An effective brand strategy gives you a major edge in increasingly competitive markets. It tells them what they can expect from your products and services, and it differentiates your offering from your competitors. Branding is all important for those of who want to be recognized for their name, business idea, business or product. Like the big name brands such as Sony, Amazon, Google, Yahoo, etc. business professionals such as freelancers, product developers, writers, pro-bloggers all need a brand to be instantly recognized by. Not only will others know who they are dealing with, but if we brand ourselves properly, then our name will be a synonym of quality further down the track.

About Me

Hey there I am Afreen the writer of this blog. I believe in God and thank him for all he has given us.
I love hanging out with my friendz and working hard. I live life to its fullest and enjoy being what I am rather than thinking what Im not. To be happy all u need is love and support from ur family n friendz.